This chapter explores successful models of co‑ordination across government bodies engaging with the private sector in development co‑operation: Development Finance Institutions (DFIs), development agencies, Ministries of Foreign Affairs and export credit agencies (ECAs). It is an abridged version of a working paper developed as part of this peer learning exercise.
Whole‑of‑Government Approaches to Development Co‑operation
Insights and Lessons from Practice
Abstract
The private sector plays an increasing role in development co‑operation
The private sector plays an increasing role in development co‑operation. DAC members engage with the private sector for multiple objectives. DAC members support private sector development in partner countries to create jobs and achieve sustainable impact. Private sector development is defined as “development co‑operation that addresses policies and institutions, market functioning and enterprise resources to improve the investment climate and the productive capacity of the local private sector – particularly of small- and medium-sized enterprises (SMEs) – in developing countries” (Miyamoto and Chiofalo, 2017[1]). They also use the private sector to deliver goods or services as part of ODA projects. This includes, for instance, infrastructure construction or consulting services. Finally, DAC members are increasingly engaging with the private sector as investment partners, to complement scarce ODA (OECD, 2025[2]).
Across the DAC more than 200 government agencies are involved in private sector development1 (Figure 6.1). Beyond DFIs, development agencies have expanded private sector activities and MFAs, line ministries and local governments are also often engaged.
Number of government agencies channelling private sector development related ODA in 2024, by DAC Member
Note: The number of agencies reported in CRS is under-estimated. Some DAC members do not report agencies that channel smaller volumes of ODA or report them under one “miscellaneous” category.
Source: (OECD, 2025[3]), Creditor Reporting System, http://data-explorer.oecd.org/s/3c.
Institutional fragmentation can lead to confusion, competition or missed opportunities
Institutional fragmentation on private sector engagement and development can lead to confusion for partners and internal competition. For instance, some DFIs report losing clients to better terms offered by other actors in the same provider system. The OECD DAC Peer Review of Italy highlighted that soft loans provided by Società Italiana per le Imprese all'Estero are in competition with those of Cassa depositi e Prestiti under the Sviluppo+ instrument which are legally required to be at market rate (OECD, 2026[4]).
While direct competition across actors within the same provider system is rare, missed opportunities to co‑ordinate and increase impact are common. MFAs, development agencies and DFIs often share similar high-level goals related to poverty reduction and sustainable growth in lower- and middle-income countries, but in practice there has been limited alignment between their strategies and activities (British International Investment and Gatsby Africa, 2022[5]). Over half of DAC Peer Reviews undertaken since 2022 include a specific recommendation on linking various actors involved with private sector development (Figure 6.2).
Source: OECD DAC Peer Reviews, 2022-2025.
Stretched ODA resources and increased efforts to link development to trade objectives are driving whole‑of‑government approaches with the private sector
Over the past few years, several DAC members have promoted synergies between DFIs and development agencies, with a view to enhancing the effectiveness of their system. In 2024, BIO and Enabel signed a first strategic agreement to create synergies across their operations (OECD, 2023[6]). In 2019, France restructured its system to transfer all private sector activities (e.g. guarantees) from AFD to Proparco to enhance clarity for partners and avoid institutional competition. Subsequently, the AFD Group has put emphasis on intra-group synergies: regional directorates have been asked to identify priority themes for operational synergies between Proparco and AFD (OECD, 2024[7]).
Moreover, several DAC members have connected their development and trade policies, with an increasing number of bodies with dual mandates delivering ODA (see Chapter 3). The Netherlands, Sweden and Finland introduced strategies that take a comprehensive approach to trade and development co‑operation and explore the synergies between the two policy areas (Martin, 2025[8]). In the Netherlands, such integrated policy is supported by hybrid instruments and institutions such as Invest International, a joint venture of the Ministry of Finance and the Dutch Entrepreneurial Development Bank (FMO) which has a dual mandate of promoting development and Dutch commercial interests (OECD, 2026[9]). In Switzerland, SECO’s flagship Swiss Import Promotion Programme is a dual-mandate programme which aims at facilitating Swiss imports in specific value chains while supporting development in partner countries (OECD, 2025[10]).
Knowledge sharing is the most common form of co‑ordination and can help actors enhance their effectiveness
Knowledge sharing is the most common form of co‑ordination. As part of recent survey of DFIs and development agencies, 73% of respondents indicated that they were co-operating by sharing knowledge and expertise (Casadevall Belles et al., 2024[11]).
Several DAC members leverage the expertise of their DFIs and export promotion agencies to support governments in improving the business-enabling environment. In Viet Nam, Proparco’s knowledge of key hurdles faced by businesses in the energy transition fed into AFD’s support to the government on improving their regulatory framework. Conversely, AFD’s expertise on Viet Nam’s regulatory framework was helpful for Proparco when advising its business clients (OECD, 2024[7]). Japan also leverages information from various public and private actors to inform its dialogue with governments on the business environment. In Cambodia, consultation across various actors including the embassy, JICA, the Japanese Business Association of Cambodia, and the Japan External Trade Organisation2 helped improve the business environment, benefiting all foreign investors3 (OECD, 2020[12]). Feedback from some DFIs shows that development agencies’ support to the business-enabling environment is sometimes disconnected from the key constraints that businesses face, and that embassies are not always able to play a feedback loop role between the DFI and the main agency or implementing partners.
DFIs often have a relatively limited geographic footprint and sometimes leverage the country expertise and networks of embassies and ECAs to inform their investment decisions. For instance, FMO has embassy account managers for the countries it operates in, which helps them understand the political and economic risks of potential investments. In Denmark and Korea, DFIs leverage the expertise of the ECA on credit and political risk assessments, as well key business sectors knowledge (OECD, 2024[13]).
The sequential approach or “graduation” model
Development agencies and MFAs often support micro, small and medium enterprises development through grants and technical assistance. Such support is generally for micro, small and informal businesses that are not creditworthy, as well as innovative business models that have strong development impact but that neither commercial banks nor DFIs can finance, due to high uncertainty on commercial viability.
DAC members have a few examples of recipient “graduation” from the development agency to the DFI or its investees, which are highlighted as “success stories” by development agencies. Enabel has supported a local company in Benin producing organic fertilisers through technical assistance and grants, and this company is now being assessed by BIO for a potential investment. Denmark has supported the African Guarantee Fund and renewable energy producer, Africa Green Co., who have now been transferred to Impact Fund Denmark as they have become financially viable4. In Nepal, SDC’s capacity-building work to make small businesses bankable was complemented by SIFEM’s loans to two commercial banks lending to SMEs. These commercial banks were made aware of the list of SMEs that were supported by SDC, and some of these SMEs received financing (OECD, 2025[10]). For development agencies, such graduations can be interpreted as an initial signal that they have successfully supported SMEs on their path towards sustainability5. For instance, the graduation of a rice production company in Cambodia based on agro-ecological principles from AFD to Proparco6 was important to demonstrate that agro-ecology could be profitable in the medium term. AFD provided technical assistance funds to Proparco to facilitate the Proparco loan and make the project successful.
Graduation is possible when development agencies and DFIs operate in the same country, when their target segments or final recipients are close7 and when they have developed beforehand a common understanding of what “bankability” means. For instance, FMO sometimes receives suggestions from the MFA or the Netherlands Enterprise Agency to finance8 companies that have previously received grant support. Often, these companies are not ready for funding from FMO because they are too small or do not fulfil FMO’s ESG or “Know Your Customer” requirements. A positive example to tackle the bridge between grant funding and DFI investments is the Dutch Fund for Climate and Development (DFCD), in which FMO works together with implementing partners SNV9 and World Wildlife Fund (WWF). In this case, Netherlands Development Organisation (SNV) which had strong country presence and local networks, offered technical assistance to local businesses, and flagged environmental and social risks. In this case, FMO and SNV focused on companies advancing climate adaptation and mitigation and worked together ex-ante to establish a common understanding of what a bankable project is (ETTG, 2022[14]).
Similarly, DFIs investments can also pave the way for ECA financing. For example, Export and Investment Fund of Denmark has financed projects that have been previously supported by DFIs. The Export and Investment Fund identifies opportunities in enhancing collaboration with DFIs, notably to target smaller-size companies or newer sectors and technologies. Such sequential involvement may be increasingly needed in technologies and frontier markets that are too risky for ECA financing such as battery storage, green hydrogen, and offshore wind in many emerging markets (Gonsalves Wetherell et al., 2026[15]).
The comprehensive package approach
Many DAC members see strong potential in offering “packages” to partner governments, including combining various instruments to increase development impact and have concessional and non-concessional resources work better together. After the launch of the Global Gateway strategy, the EU adopted in 2024 the 360‑degree approach, which aims at ensuring that EU infrastructure investments are complemented by a range of soft measures. For instance, the Manufacturing and Access to Vaccines, Medicines, and Health Technology Products in Africa (MAV+) initiative includes support to vaccine production (supply-side), off-take for made-in-Africa products (demand side), better pharmaceutical and health systems, building a skilled workforce, and ensuring regulatory frameworks and oversight (enabling environment) (OECD, 2025[16]). Since 2021, Korea has boosted its whole‑of‑government co‑ordination to offer infrastructure “packages” to partner countries. In Uzbekistan, Korea successfully managed to provide a whole‑of-government “package” that included the construction a children’s hospital (KEXIM-EDCF), training of the medical staff (from KOICA), and the preparation of operating manuals for the hospital (Korea Foundation for International Healthcare)10 (OECD, 2024[17]). Korea is aiming at replicating such packages and increasing synergies across KEXIM, KOICA and other agencies providing grants (OECD, 2026[18]).
Aligned governance systems help, but dedicated mechanisms can be created in more complex institutional set-ups
When the DFI and the main implementation agency (MFA and/or development agency) are overseen by the same ministry(ies), co‑ordination is easier. Such governance structures are generally associated with a common overarching strategy and common country-level priorities, common results framework, joint evaluations and common knowledge management. For instance, the fact that AFD and Proparco are part of the same group also means that there is a common IT system and that staff mobility across institutions is encouraged, which facilitates knowledge-sharing and mutual understanding. In Switzerland, SDC and SECO being under two separate federal departments makes co‑ordination more complex. For instance, the Peer Review highlighted that Switzerland undertook two parallel evaluations of private sector engagement: one for SDC and one for SECO, which was a missed opportunity to improve Switzerland’s engagement with private sector as a whole (OECD, 2025[10]).11
However, even when the DFI and main implementation agency are overseen by distinct lead ministries, mechanisms can be put in place to promote co‑ordination when there is strong political leadership. In Sweden, Sida and Swedfund are overseen by different ministries and Swedfund does not have the mandate to implement development co‑operation regional, thematic and bilateral strategies (OECD, forthcoming[19]). However, Team Sweden effectively promotes co‑ordination between various actors including Sida, Swedfund, and export credit agencies both at headquarters and country level.
Good co‑ordination takes time, so members might do well to start small in selected countries and sectors
Ex-ante co‑ordination takes time to implement and to bear fruits. The examples of Korea and the Netherlands show that good co‑ordination on pipeline development requires time to ensure that all partners have a common understanding of what bankability means. The example of France shows that after five years of efforts towards intra-group synergies, increased co‑ordination provides better client service capacities from each group, but the translation into increased business for Proparco is yet to be measured.
Piloting whole‑of‑government co‑ordination in a few strategic countries and sectors works well. In the case of the Netherlands, FMO and SNV focused their efforts on climate and energy transition. Since 2019, the AFD Group has pushed for intra-group synergies and has asked regional Directorates to select priority areas for synergies. For instance, in South-East Asia the AFD Group focuses co‑ordination efforts on three sectors: energy transition, green finance and blue economy.
Co‑ordination does not mean diluting mandates nor interfering in decision-making processes
Scepticism from development agencies towards co‑ordination often comes from the fear of mission drift. Feedback from interviews showed that most concerns from ministries and development agencies came from a fear that resources would be diverted towards DFI priorities.
DFIs worry that co‑ordination will lead to interference with their decision-making process, or those of DFI investees. Feedback from DFIs indicates that they are sometimes asked to support companies that are not bankable but are primarily driven by foreign policy considerations. DFIs generally find it particularly useful to preserve their operational autonomy and long-term strategies when political cycles are short and political priorities change.
DFIs and ECAs offer powerful complementarities but would benefit from keeping clear and separate mandates. DFIs and ECAs can help scale up private climate finance to emerging markets and developing economies (EMDEs), and more co‑ordination will require stronger incentives, including joint key performance indicators (KPIs) across climate, development and trade portfolios (Gonsalves Wetherell et al., 2026[15]). However, coordination should not lead to “mission creep” (Bilal and Klasen, 2026[20]). The OECD blended finance guidance encourages further co‑ordination but recommends that the decision-making processes of ECAs and ODA remain independent to avoid conflict of interest and ensure clarity in the pursuit of their respective mandates (OECD, 2025[21]).
To be successful, common country presence needs to be backed by incentives
Common country presence makes co‑ordination easier. DFIs generally have more limited country presence12 than development agencies, especially when they have an indirect investment model (e.g. investments in funds). For instance, Switzerland’s Peer Review showed that embassies were rarely aware of SIFEM operations, as it operates from Switzerland through an indirect model (OECD, 2025[10]). Feedback from Korea also shows that co‑ordination between KOICA and other agencies that support small businesses from headquarters is difficult.
More importantly, there needs to be incentives to co‑ordinate. The example from Korea shows that even though EDCF has representative offices in 15 countries, all of which have KOICA offices, co‑ordination is still limited. Project cycle timelines make co‑ordination challenging. Indeed, KOICA’s budget has to be spent during the year, and EDCF is involved in infrastructure projects where delays are common, which makes co‑ordination challenging for KOICA13. Similarly, feedback from FMO highlighted that the institution prefers to invest in SMEs once the nearby infrastructure has been built, rather than factoring future infrastructure into its investment decision process (e.g. infrastructure projects planned under Global Gateway).
Incentives to promote whole‑of‑government synergies might be stronger for development agencies than for DFIs. A recent survey DFIs and development agencies (Casadevall Belles et al., 2024[11]) showed that they hold divergent perspectives on the success of their current co‑operation efforts. Indeed, DFI respondents express higher satisfaction with current levels of co‑operation than development agencies. Higher appetite for co‑ordination from development agencies may be driven by the fact that they perceive graduation of companies to DFIs as “success stories”, demonstrating that their operations help SMEs on their path towards sustainability.
Whole‑of‑government coordination on private sector development and engagement has the potential to enhance positive economic, social and environmental impact in partner countries. Development agencies can strengthen the underlying conditions for the local private sector to thrive, DFIs can scale-up impactful market-based solutions, and ECAs can help promote high-quality standards for investments in low- and middle-income countries often going beyond domestic firms.
However, co‑ordination can be costly, takes time to implement and bear fruits and should not be sought in every context. Coordination between development agencies and DFIs is especially relevant when these institutions operate in same countries and sectors and when their target segments or final beneficiaries are close. DFIs can also leverage ECAs’ expertise and pave the way for export financing, but these institutions should keep clear and separate mandates.
References
[20] Bilal, S. and A. Klasen (2026), Bridging, not mixing: Enhancing coordination between trade and development finance, https://www.berneunion.org/Articles/Details/1003/Bridging-not-mixing-Enhancing-coordination-between-trade-and-development-financ (accessed on Accessed on June 2nd 2026).
[5] British International Investment and Gatsby Africa (2022), Unlocking Synergies between Private Sector Development and Development Finance.
[11] Casadevall Belles, S. et al. (2024), How Well Do Development Finance Institutions and Bilateral Agencies Cooperate on Development?, https://www.cgdev.org/publication/how-well-do-development-finance-institutions-and-bilateral-agencies-cooperate.
[14] ETTG (2022), Enhancing coordination between European donors, development agencies and DFIs/PDBs, https://ettg.eu/wp-content/uploads/2022/09/Enhancing-coordination-between-European-donors-ETTG-brief-september-2022.pdf.
[15] Gonsalves Wetherell, S. et al. (2026), “Unlocking DFI-ECA Collaboration for Clean Energy Finance: Diagnostics and Pathways to Improvement”, https://www.smithschool.ox.ac.uk/sites/default/files/2026-01/Unlocking-DFI-ECA-Collaboration-for-Clean-Energy-Finance-Diagnostics-and-Pathways-to-Improvement.pdf.
[8] Martin, C. (2025), “Aid for Trade at a crossroads: Building partnerships for trade and sustainable development”, OECD Development Co-operation Working Papers, No. 118, OECD Publishing, Paris, https://doi.org/10.1787/a991872b-en.
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[3] OECD (2025), Creditor Reporting System (dataset), http://data-explorer.oecd.org/s/3c.
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← 1. These are calculated based on the OECD DAC data reported by members to the CRS. It represents the number of unique agency names per DAC Member when calculating ODA disbursements with purpose codes corresponding to private sector development as defined in Miyamoto, K., & Chiofalo, E. (2017). Development Co‑operation for Private Sector Development: Analytical Framework and Measuring Official Development Finance. In OECD Development Co‑operation Working Papers. OECD Publishing, Paris. doi:10.1787/ded2028f-en. Funds that were traceable to specific institutions were counted as part of those. Local government and administrations are included in this calculation.
← 2. Japan External Trade Organisation (JETRO) helps the Japanese private sector understand the business and regulatory environment in a partner country so that they can resolve challenges, follow national laws, and uphold labour and safety standards.
← 3. At the May 2019 Cambodia Investment Seminar, Prime Minister Hun Sen announced the elimination of Camcontrol, reduced fees to scan containers, reduced rates for electricity and implemented measures to stabilise supply. He later announced the abolition of the prepaid corporate tax.
← 4. The African Guarantee Fund was established in 2011 by the Government of Denmark (represented by DANIDA), the Government of Spain (represented by AECID) and the African Development Bank (AFDB), with a mandate of facilitating access to finance for SMEs to enable them to fully play their role of driving the growth of African economies. As the fund has become commercially viable, it has now been transferred to IFDK. Africa Green Co. – a renewable energy buyer and seller that reduces energy prices and expands renewable energy supply across southern Africa – was initially supported through technical assistance by DANIDA and then received an investment from IFDK.
← 5. With a view that they can access market-based finance in the long-run.
← 6. The company had received support from AFD through water and irrigation projects.
← 7. Survey conducted by the Africa Resilience Investment Accelerator shows that typical minimum direct DFI ticket size (USD 5-15 million) is sometimes too large for SMEs supported by development agencies. However, in some cases, DFIs aim to target the “missing middle” of SMEs and/or support local funds or financial institutions that on-lend to small businesses. For further information see: https://static1.squarespace.com/static/61af528eb14c603aa79149d2/t/6756b403d4b4867eeec40ab6/1733735445749/ARIA+-+Foundations+of+Growth+4.pdf
← 8. Directly or indirectly through financial institutions that receive FMO financing.
← 9. SNV was established in 1965, under the Dutch Ministry of Foreign Affairs, and formally separated from the Ministry of Foreign Affairs in 2002, but is still an important implementation partner.
← 10. This package was successful from a whole‑of‑government perspective, but the OECD DAC Peer Review noted that development impact could have been higher: “The facility is not easily accessible to the public since out-of-pocket costs are considerable. Recognising that the Uzbek national insurance policy does not extend coverage to hospital patients, Korea has been providing policy support to enhance the sustainability of the project. While this risk was likely identified at the onset, greater co‑ordination among Korean implementers and dialogue with national authorities and other development partners might have led to a better understanding of ways the investment might have been more accessible to the general population, for instance, through better sequencing of complementary investments”. A similar case of co‑ordination was highlighted in the Korea Peer Review: inter-agency co‑operation in Uzbekistan led to the sequencing of KOICA grants for a pilot project on the introduction of a geo-spatial system, with KEXIM-EDCF loans financing their roll-out.
← 11. Switzerland is currently promoting joint SDC-SECO evaluations (see Management Response).
← 12. According to Devex, DFIs that have the most country offices are Proparco (23) and DEG (18). DFIs use an indirect model to manage operations from headquarters, using staff missions to partner countries when needed.
← 13. For more details see Whole-of-Government approaches to private sector development and engagement